Some Help From Brian For Crystal

I currently do not have any credit cards. I have a very poor credit score of 574. Last month and this month I paid off about four accounts. I tried to negotiate a pay for delete but they said that they do not do that and made me think that I was crazy. They were all telling me things like that doesn’t exist or we can’t delete and account. They all said that all they could do is update it to show paid in full, and that would indicate a satisfactory account. Instead what has happened is it says Paid, was in collections and my score hasn’t increased at all. I have a terrible run of bad luck lately and I desperately need a car. I am trying to get my credit in order to be able to get a car at a reasonable APR. The thing is I need the car like yesterday.

I have about six more collections accounts to pay off. They all total about $2229.00. The one account that I have in good standing is an auto loan that I am currently still paying on because when the car was totaled I was upside down. That amount is $3973.00.

Where do I begin? What do I do first. I will have the auto loan paid off by 12/18/2009. Do you think that I will be able to get approved for a decent loan by January if I pay off the current loan and pay off all the other accounts? The problem that I am facing now is that places will finance me on used cars with high mileage for unreasonable prices at 24% APR. Please help me. I am lost.

Thank You,
Crystal

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Crystal,

Unfortunately the way the system works is that when you pay off your old collection accounts it will renew the “date of last activity” and destroy your score.  If you pay off a collection from 2004, it will damage your score with the same level of intensity as a brand new collection. Extremely counterintuitive, but it is the policy nonetheless.

Please note I am not informing you to not pay bills that you owe on, but simply letting you know what will happen to your credit score when you pay off outdated derogatory accounts.  Personally, I find the fact that you are repaying your debt and not taking the easy way out is admirable and deserves consideration.

I apologize for not having better news for you, but if you have any further questions or would like assistance with your credit repair process I would be glad to help.

Brian C. Aber
Senior Account Executive – HTDI Financial Charter Board Member – National Association of Credit Services Organizations
877-877-4834 x704